The Nation | COLUMN ONE

A Busy Signal for FCC Chief

Michael Powell vows to weather a policy setback and press his agenda for deregulation. Critics question whether his style suits his job.

March 05, 2003|Jube Shiver Jr. and James S. Granelli | Times Staff Writers

WASHINGTON — Few presidential appointees had as much promise as Michael K. Powell.

The 39-year-old son of Secretary of State Colin L. Powell was named by President Bush to run the Federal Communications Commission in 2001. To Republicans, he seemed the perfect choice.

He had the resume: U.S. Army. Antitrust lawyer. Service on the commission since 1997. And he had the core belief in deregulation that his party believed would unwind eight years of Democratic rule making. He was a political star in the making.

"No FCC chairman, from day one, has been more politically powerful, more well-connected and more knowledgeable coming into the job since perhaps Newton Minow during JFK's administration," said former FCC Chairman Reed Hundt, a Democrat who steered the agency through the initial writing of telecommunications rules in 1996.

For The Record Los Angeles Times Thursday March 06, 2003 Home Edition Main News Part A Page 2 National Desk 2 inches; 81 words Type of Material: Correction FCC commissioners -- In some editions of Wednesday's Section A, a profile of Federal Communications Commission Chairman Michael K. Powell included a photo caption that mistakenly identified Commissioner Jonathan Adelstein as his colleague Michael Copps. Also, because of a production error, part of a quote was missing. It should have read: "We kept waiting for them to walk over to us" and offer a deal, said one FCC staffer close to Powell. "But they never did."

But like so many others who came to Washington with the golden glow of great expectations, Powell failed his first big political test.

Two weeks ago, Powell suffered a stinging defeat in his effort to overhaul the rules governing competition in the local telephone market. The setback underscored that turning ideology into policy is as much about personal politics as tactics.

Now, he is in danger of squandering his opportunity to reshape the nation's communications landscape. Powell's failure to woo a majority of commissioners to his ardent deregulatory position has caused many in government and industry to doubt his ability to lead the commission. It also has cast doubt on Powell's political future beyond the FCC.

"Powell had made telecommunications reform a key part of his tenure," said Allan Tumolillo, chief operating officer at market research and consulting firm Probe Research Inc. in New Jersey. "But now he's a weakened chairman."

Although Powell continues to enjoy support from some elected officials -- including Rep. W.J. "Billy" Tauzin (R-La.), who chairs the House committee that oversees the FCC -- other lawmakers and industry leaders who asked not to be identified said he must adapt to survive.

"Powell doesn't communicate well and doesn't solicit opinions of others," said one telecom industry executive. "He's said, 'I could have got some warmed-over compromise, but I didn't want to sacrifice my principles.' But every decision reflects a compromise. To be in an agency that necessarily requires some degree of consensus, you can't operate like that."

For his part, Powell downplayed suggestions that he harbors "any personal anxieties about" being perceived as an ineffective chairman.

"This is a democratic institution," he said Tuesday. "I'm not an obstructionist."

Difficult Setback

Powell's defeat was particularly bruising because the Republican chairman was outflanked by someone from his own party: Commissioner Kevin J. Martin, a former FCC staff member with close White House ties. Martin forged an alliance with the commission's two Democrats to foil Powell's proposal to free the regional Baby Bell phone companies from having to lease their lines to competitors at discounted rates.

The vote ended the commission's first review of competition rules under the Telecommunications Act of 1996, which was designed to give consumers more choices and lower prices for local telephone service.

In the hours after the Feb. 20 vote, the financial markets wiped out $16 billion in shareholder equity in companies such as SBC Communications Inc., the dominant local phone provider in California. Over Krispy Kremes with FCC staffers the next morning, Powell -- with military-style gravity -- told them that the stock market reaction was a reminder "that we are playing with live ammunition" and bitingly referred to Martin as the "$16-billion boy" who caused the market fallout.

Comments like that undermine the commission's public assertions that the split between Powell and Martin was an ideological disagreement between friendly colleagues.

Although some speculated that Powell took the defeat personally, the FCC chairman put an upbeat spin on the vote and expressed little concern about damage to his political stature.

"Believe it or not, I'm largely satisfied with" the outcome, Powell said, adding that he was "ready to go on to the rest of the agenda."

Candidate for Office?

The FCC chairman, who lives in Fairfax Station, Va., is said to be interested in running for governor of the state one day. Powell associates say he has not talked openly about seeking political office. Former FCC Commissioner Nicholas Johnson, a populist Democrat who disagrees with Powell's policies, thinks Powell could be a viable candidate because of his name recognition and potential fund-raising ability.